Oil prices advanced bolstered by a rebound in oil products ahead of the weekly inventory data by the government backed Energy Information Administration on Wednesday.
Lights sweet crude for August delivery, the new US front month contract, added 63 cents or 1% to end at $61.01 a barrel on the New York Mercantile Exchange.
Brent for August delivery added $1.11 or 1.8% to end the session at $64.45 a barrel on the London based ICE Futures Exchange.
Also aiding the rally were reports talks between Iran and its international negotiators over a potential nuclear agreement had hit a snag potentially delaying a potential deal.
Traders expect the international community to lift economic sanctions on the Islamic country once a deal to limit its nuclear program is agreed on. This will result in Iran increasing its oil exports, which were curbed by the sanctions, potentially worsening the global glut.
The American Petroleum Institute reported that oil stockpiles had fallen for the eighth straight week declining by 3.2 million barrels for the week ending June 20. The decline exceeded the 2.1 million barrel consensus estimate of analysts polled by the Wall Street Journal.
Futures of petroleum products like ultra low sulfur diesel and gasoline rallied more than crude to lead Tuesday’s gains.
“I’m guessing people who were short the ULSD and gasoline cracks the past few days took some profit to push those markets higher,” David Thompson, executive vice president of energy commodities brokerage Powerhouse in Washington, told Reuters.
“Technical and buy-stop orders were probably activated in the process.”
The rally was however capped by a stronger dollar which continued its rally against a basket of foreign currencies on the uncertainty over Greece.
A stronger dollar is bearish for the demand of commodities denominated in Dollars like oil as it makes them harder to afford to holders of foreign currencies.
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